Friday 29 Mar 2024
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This article first appeared in Forum, The Edge Malaysia Weekly on January 9, 2023 - January 15, 2023

I’ve been going around telling everyone that 2023 will be the best year of my life and everything after will be downhill. That is because “23” is my favourite number, simply because Michael Jordan wore the number 23. The Last Dance, an ESPN documentary on Netflix that came out in 2020 at the start of the pandemic, when all live sports were shut down, was the most-watched ESPN documentary of all time. The documentary depicts Michael Jordan and the Chicago Bulls during the 1997/98 NBA season, when they were embarking on their sixth NBA Championship run.

Spoiler alert: The Bulls won, Jordan won the regular season and NBA Finals Most Valuable Player. And just like Lionel Messi in the Fifa World Cup final, Jordan came through for his team with 45 out of 87 points — for context, scoring champions typically average around 30 points per game — in the final game of the Championship series, including an incredible score-steal-score sequence that, honestly, even the Disney channel would turn away as being too unrealistic.

The context is even more incredible. The Bulls’ second best player, Scottie Pippen, was gutting it out and playing through horrific back spasms, being used as a decoy on offence more than anything else. The Bulls were playing in Salt Lake City, Utah, home of the Utah Jazz, and home to a truly raucous crowd. They had led three games to one in the best-of-seven series, but lost in Chicago, swinging the momentum back to the Jazz. If anything, it was kind of like a recipe for Murphy’s Law for the Bulls. Except, of course, the Bulls had Jordan.

Regular readers of my column (this will be my 10th year writing a column for The Edge — just a side note to record my deepest gratitude to The Edge, Azam Aris and Dr Nungsari Radhi for giving me the opportunity to write in The Edge for so long) will know that I love drawing all kinds of analogies to economic issues. And since we are in the year 2023, this Jordan Game 6 (immortalised as well in a Jay Z and Kanye West song whose title I cannot repeat in print) thing is actually, and hear me out, analogous to the challenges that Malaysia and the world face in 2023.

If 2022 was a truly difficult year for economic growth — think of the war in Ukraine, China’s zero-­Covid policy, the US Federal Reserve’s single-­minded pursuit of lower inflation via rate hikes — 2023 may prove to be even more difficult. Many economic analysts are calling a US recession in the second half of 2023, as a consequence of unyielding Fed rate hikes. We don’t know how long the war in Ukraine will go on — a prominent international think tank puts its assumption at five years — and how much more extreme the war might get. And with regard to China and its transition towards reopening its economy, three years of pent-up savings is about to be unleashed on the rest of the world, with potentially enormous consequences for demand-side inflation. On top of all that, we are in the midst of a climate crisis that will see more extreme weather patterns as we move forward.

Malaysia, of course, has its own specific problems to address. We now have political stability, which is very much welcome, but political stability alone doesn’t resolve existing structural issues. In particular, political stability alone doesn’t resolve the fact that, fiscally, the government’s hands are still very much tied. The fiscal space we might need to engineer growth or national resilience is limited. And with potentially higher oil prices to come — given whatever is happening with Iran and the Ukraine war — as well as food prices, we need to optimise our bullets as best as we can.

So, the government is in some ways in a similar situation to what the Chicago Bulls were in Game 6 of the 1998 NBA Finals. They are facing a hostile external environment on multiple counts, any positive momentum is unlikely to take place at least for this year, and their resources (think of Scottie Pippen as a human resource) are severely limited. If the government is going to make 2023 a foundational year for economic growth and development moving forward, it will need to dig deep and, like Mike, really focus on what is within its powers and what is not.

To that end, this is where political stability has an important role. With political stability — a two-thirds majority in the Dewan Rakyat — comes the ability to implement legislative, policy and regulatory reforms. Sure, there aren’t enough fiscal resources to be spent on the types of economic activities we might like to see, but there is still so much the government can do to address the various issues and challenges that Malaysia faces via non-fiscal measures. It requires political conviction, an ability to build coalitions (which, in fairness, is something this particular government has done well so far) and, in some cases, the signature of a pen.

To give a more concrete example, let’s think of electric vehicles. In the past, the way the government has attempted to support the adoption of EVs is to provide some import tax exemptions on EV purchases. This is a fiscal measure. But there is so much more it could still do to get the policy space right for a greener transport eco­system. For instance, our neighbours Indonesia, Thailand and Singapore all have some form of an internal combustion engine vehicle ban between 2035 (Thailand) and 2050 (Indonesia). We could easily come up with such a policy. It requires dealing with the automotive lobby, for sure, but that’s a matter of political conviction and providing a sufficient adjustment period.

Another example is with regard to foreign talent. Countries that are attempting to increase their knowledge base and get closer to the global knowledge and technological frontier will need knowledge transfer from that frontier. Towards that end, one thing we could consider is to make it easier for high-skilled foreign talent in themes we care about — say food security, energy transition, advanced manufacturing and so on — to migrate into Malaysia via work permits. This is a policy or legislative decision; it doesn’t necessarily require a fiscal injection and, if anything, we would be adding potentially more taxpayers in the country. Yes, there are naturally concerns the Ministry of Home Affairs might raise on national security, but the government could easily enough ring-fence certain industries (say, defence) in which the participation of foreign nationals might be more heavily restricted.

In any case, I think 2023 is a year in which the government could really lay down some strong foundations for the future. What it needs to do is simply to focus on what it can control, and then build broad political coalitions for pushing towards the policy space the country needs. And, if we can do so, maybe we can go some ways into setting ourselves up for the future amid a really trying global environment and, maybe unlike my theory about my own fortunes, it can be all uphill from here! And if we are even more lucky, we might come out of this far, far stronger. Maybe we could be like Mike.


Nicholas Khaw is an economist and head of research at Khazanah Nasional Bhd

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